How to pick the best credit cards for your lifestyle

Credit cards come in a variety of categories, and each type of card offers a different combination of terms, features, options and perks.

What they have in common is the flexibility and convenience to buy now and pay later, either in full every month or over several months.

The first step toward picking a credit card that fits your lifestyle is understanding the different types of cards that are available. The right type of card can provide you with greater financial flexibility, improve your ability to deal with ongoing financial challenges and offer you substantial value through rewards and benefits.

On the other hand, the wrong type of card could leave you with fees you can’t afford, benefits you don’t use or a credit limit that’s out of sync with your budget.

Low interest credit cards

The main appeal of low interest credit cards is the minimal interest they charge on debt. If you pay off your balance each month, however, then the rate isn’t all that important and these cards may not be especially appealing.

If you carry debt from month-to-month, the rate could have a huge impact on your finances. A higher rate could balloon your debt over time while a low interest rate could allow you to keep debt in check. Some cards of this type offer low or zero interest just for an introductory period, after which time the rate increases.

Balance transfer credit cards

If you already have a substantial amount of credit card debt, it’s worth considering a balance transfer card. You can transfer your existing debt onto this type of card and then pay that debt with zero interest over a certain period of time, usually between six months and two years.

These cards typically charge an initial transfer fee, often 3 percent to 5 percent of the total amount transferred, but freeing your debt from a high interest rate could be worth this upfront, one-time cost.

Secured credit cards

If you have a limited or poor credit history, you may find yourself in a conundrum: You need a good credit history to qualify for a credit card, but without a credit card it’s difficult to build up a good credit history. Secured cards offer a solution. You provide a cash deposit upfront that is equal to the card’s credit limit. If you pay your balance on time then your credit history improves; if you don’t, then your deposit is used to cover the amount you owe.

Student credit cards

Another type of card designed for people with limited credit history is the student card. Unlike secured cards, no cash deposit is required for these cards, but cardholders must be enrolled in a college when they apply for the card.

Rewards credit cards

There are scores of cards that offer rewards tied to your spending. These cards offer a wide range of rewards, including frequent flier points, free hotel stays or credit to purchase gasoline. Cashback rewards cards even allow cardholders to redeem points they earn through spending for cash that can be deposited into an account or used to pay down your card’s balance.

Some rewards cards also offer benefits that aren’t directly tied to your level of spending. For example, travel rewards cards often let you check a piece of luggage for free on participating airlines or might offer discounted airline upgrades.

Store branded cards

Some retailers offer credit cards designed to incentivize their customers to purchase at their stores or websites. You might receive points for your purchases that are converted into store credit or other benefits. These cards often also provide set discounts on all purchases, special access to financing on some purchases and other rewards to encourage you to spend more.

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